US economy ekes out 0.4% growth in fourth quarter

Jobs fair Rising home prices and an improving labour market has fuelled hopes for an economic recovery

Related Stories

The US economy grew at a faster than expected 0.4% in the fourth quarter of 2012, the Department of Commerce has said.

The annualised figure was better than an earlier estimate of 0.1% growth, reflecting increased investments in plant and equipment.

However, despite the upwards revision, the department warned that the economy remained "sluggish".

The latest figures were a marked slowdown from the previous quarter.

An acute fall in defence spending and government expenditures hurt economic output, said the department.

"While non-residential fixed investment is higher than previously estimated, the revision to GDP [gross domestic product] has not changed the general picture of the economy," said a statement.

The October-December figures came amid hopes that the US economic recovery is gathering steam, following a string of recent data showing rising home sales and an improving labour market.

Wall Street shares opened flat on Thursday, with the S&P 500 index hovering near its all-time closing high.

"Fundamentally, the economy is improving and we are getting good earnings," said Jack DeGan, chief investment officer of Harbor Advisory.

BMO Capital Markets economist Jennifer Lee described the revised fourth quarter rate as "still disappointing", but said that the investment bank was expecting US GDP to increase by 2.2% this year, the rate at which the economy grew last year.

In a report last week, the US Federal Reserve said that the economy had strengthened "moderately" but still needed stimulus measures to underpin recovery.

The Fed has said it would keep its policy of buying $85bn a month of Treasury bonds and mortgage-backed securities in order to lower borrowing costs for households and businesses.

Although US joblessness has fallen, the Fed said it wanted to see signs of a long-term trend of falling unemployment.

More on This Story

Related Stories

More Business stories

RSS

BBC Business Live

  1.  
    FRACKING LICENCES 06:03: Radio 5 live
    Barton Moss Results from test drilling for shale gas at Barton Moss, Salford are being analysed

    Energy companies are being invited to bid for licences to extract oil and gas from large areas of Britain, using the controversial process known as fracking. The technique will be all but banned from national parks and other environmentally sensitive areas. Mike Bradshaw, professor of Global Energy at Warwick Business School, says people are concerned: "We've got very limited experience of fracking in the UK. So we don't know the answer to many of the questions that people have about what fracking will look like under UK and EU regulations which are very different from those that exist in the United States."

     
  2.  
    06:01: Matthew West Business Reporter

    Morning folks, as ever you can get in touch with us by email at bizlivepage@bbc.co.uk and on twitter @bbcbusiness.

     
  3.  
    06:00: Rebecca Marston Business reporter, BBC News

    Monday morning. Here we are. Fracking is under the spotlight as companies start to bud for licences to drill for shale gas. Stay with us for the pick of the business news from the BBC and elsewhere.

     

Features

From BBC Capital

Programmes

  • A sun bearThe Travel Show Watch

    The Borneo sanctuary coming to rescue of the world’s smallest bear

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.